Ec-907
Who controls the production factories in a communist command economy?
The government
Definition of Organized Labor
A labor union is a group of workers who join together to improve their working conditions
What is an an economic good
An economic good is a tangible, physical object that can be seen, touched, and stored
What is the definition of "business risk"?
Business risk is the inherent possibility of loss
What is an price competition
Price competition focuses on attracting customers based solely on the cost of the product
How is it decided what goods and services will be produced?
The government determines production plans
What is collective bargaining
Collective bargaining is the negotiation process between an employer and union representatives to create a formal agreement regarding worker'
Why are both economic goods and services considered "scarce" in business terms?
Both require limited economic resources (land, labor, and capital) to produce.
What are the four primary classifications of business risk's
hazard, operational, strategic, and financial risks.
What is an "perfect competition"
Perfect competition is a theoretical benchmark market structure where there are many buyers and sellers, products are identical
How products will be produced?
the government dictates production methods
Types of Unions
Craft or trade unions
What is the cost of goods
The cost of goods represents the direct amount of money a business pays to acquire or manufacture raw materials for the products it plans to sell.
What are "pure risks"
Pure risks only carry the possibility of loss or no loss
How does an oligopoly work
An oligopoly occurs when a market is dominated by a few very large businesses
What mechanism dictates how products are allocated
The government manages distribution
What is Labor Action and Strikes
A strike is a work stoppage where employees refuse to report to work. Unions use strikes as a pressure tactic when contract negotiations stall, forcing management to address demands
What is Gross Profit
Gross profit is the money left over after subtracting only the cost-of-goods from the total revenue/income.
If a company experiences a reduction in sales because a direct competitor released a superior product on the market, what specific risk category does this fall under?
strategic risk
What is a regulated monopoly
A regulated monopoly is a single company legally allowed to control an entire market
Why are consumer goods frequently in short supply under this economic model?
state planning
How do labor unions impact a business's cost structure and management decisions?
Unions can increase labor and overhead costs through higher mandated wages and benefits.
What are "industrial goods"
Industrial goods are products purchased by businesses to produce other goods or to assist in running daily operations
What are the one core methods a business can use to handle or manage risk?
A business can manage risk by avoiding it
Which major piece of legislation prevents monopolies from forming and prohibits unfair practices like price-fixing?
The Sherman Antitrust Act is the core piece of U.S. legislation used to maintain healthy economic competition.